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Retailers using WiFi to link with customers

Rochester Business Journal
December 6, 2013

As the retail landscape evolves, adding WiFi to the shopping experience promises to be one of the ways players can differentiate themselves this holiday season.
 
In-house WiFi, a wireless networking technology that uses radio waves to provide access to the Internet, gives retailers an opportunity to gain consumer knowledge and create connectivity among stores to meet customers' needs better.
 
"The smart ones-the Walmarts, the Targets of the world and many others-all realize this," said Christopher Hauca, managing director of Acquity Group LLC. "I think they're doing the smart thing, which is: We want to compete on the fact of our merits and our pricing and our service. We can't live in a bubble that says it's a WiFi-free zone."
 
Target Corp. is one retailer that has taken e-commerce to the next level by emulating Amazon.com Inc.'s method to compete in the overlap of consumers between the brands. This year Target has spent nearly as much on improving technology as it has on opening new stores, recent reports state. The chain is looking to increase its online footprint and adapt with its customer base.
 
To compete more effectively with other retailers, Target is focusing on Internet sales, 2 percent of its $73 billion in revenues last year, to be more accessible online to customers.
 
Locally, the in-store WiFi has been a convenience for shoppers and has made Target's new Cartwheel application more readily used by customers looking for coupon savings in the store.
 
"The WiFi is always permanent here, so whenever they come in (it) definitely helps them out and anytime that we're open we have our WiFi up and running," said Kevin Walders, assistant manager of the Target store in Henrietta. "We even had some specialty Cyber Monday deals through our Cartwheel app, which (helps) drive a little bit of in-store customer loyalty, which is great to see.
 
"I've only received positive things about it, and we're just looking for ways to make shopping more convenient and helpful for (customers). You've just got to be very open-minded and see the benefit in the long term."
 
Providing WiFi to consumers this holiday season is an opportunity for retailers across the country to get to know their customers. Logins with links to in-store networks give companies more information about clientele.
 
Stores such as Macy's and Lowe's are spearheading the effort, using WiFi as a point of engagement, seeking to embrace technology instead of fight it as many retailers did in the past.
 
Just providing WiFi is not enough. Linking customers and their mobile devices through using the store's WiFi network is an opportunity for store representatives to send customers check-in messages and information about discounts and new items. Since customers use the WiFi in the store, the potential to connect to them in new ways is an opportunity for increased sales as the store can track the mobile activity of their customers and better assist them.
 
"If you look at it solely on just providing your customers increased bandwidth and connectivity in their stores, I don't think the ROI is there," Hauca said. "If you're not able to actually tie that mobile traffic to the actual customers, you're just becoming an Internet service provider for your customers. You need to have a strategy to link that information together, be able to link it to your customers to understand what they're buying from you."
 
He added: "I think it's going to be a scenario where just like you have lights in your store and maybe music playing, you need to have some WiFi available to your customers. The big-box and the stand-alone (stores)? I think honestly they need to do that. It's foolish for them not to."

Malls involved
Locally, malls are aware of the consumer need.
 
"From the Eastview standpoint, we installed free mallwide WiFi a little over a year ago as (an) amenity for our shoppers and store employees," said Wendy Roche, Eastview Mall's marketing director. "(With) the addition of several new soft-seating areas, this is something shoppers and mall workers are taking great advantage of."
 
The demand can be tracked, and people are using the service readily.
 
"Our download numbers are great, and they're increasing as well," said Janice Sherman, corporate director of marketing for Wilmorite Inc. "You can use your phone right in the mall to see who has what sales and how to get to each store, because it's a bit of a labyrinth in there. The biggest indicator is that people are using it. We haven't had any negative feedback. It's here to stay."
 
Consumers who desire to compare prices or search for sales would be most likely to use the service.
 
"My suspicion is it's probably not going to be used for the hottest-selling items but it's going to be used for people that are very thoughtful consumers, that actually want to understand if they're getting a deal," Hauca said.
 
Stores such as Walmart could track the mobile activity of customers in the store to find out what their customers are buying, as well as find items in other stores that could be easily shipped to customers if the store they are in does not have them in stock. The connectivity among stores and inventory through WiFi is another opportunity to retain sales.
 
"They might not have the exact size in stock, but the fact is if you're on a mobile network, ... Walmart can absolutely tell at that point that you're connected to their in-store WiFi, could give you the option of saying, 'Well, the other store over here has got it, and I'll ship it to you for free.'"
 
One challenge of the new connectivity within retail is privacy.
 
"The retailer is providing the bandwidth in return. What's the retailer going to get that is acceptable to the customer?" Hauca said. "The retailer wants everything they can get in touch with: They want the sale, the demographics, where they are in the store, what they're looking at, and that's the balance that will need to be struck. I think that's where you see a lot of organizations tread and slowly creep into that."
 
WiFi would not necessarily be useful for smaller retailers, since it would not be as cost-efficient to provide for customers.
 
"I think you have a challenge with the guys that have really small footprints," Hauca said. "(With) one or two stores, if it's a small apparel company, I don't think there necessarily is a really strong case to actually be delivering WiFi in that model."
 
The future of retailing may include mobile checkout, allowing stores to sell more inventory, employ fewer people and become showrooms for consumers, who could scan the items they want and walk out the door, having purchased them from their phones.
 
"Walmart is testing this, and this is where I think a lot of organizations could potentially benefit," Hauca said.
 
The move to self-checkout would eliminate lines and the space within the stores that cash registers take up, turning the store into more of a showroom for inventory. This is an early technology that hasn't been adopted yet but is in the works.

Key differentiator
Not having a plan for technology within big-box stores could be a disadvantage some stores face this year, losing opportunities for sales to those stores that noticed the shift in the industry.
 
"I think the retailers for many years were focused on fighting this and fighting any type of new experience," Hauca said.
 
Many retailers had stuck to traditional methods such as calling other stores to look up items for customers, having outdated forms of marketing and resisting mobile apps. Some stores now are spending on technology, including connecting to customers via mobile deals, offering connectivity to see inventory levels and monitoring the mobile use of in-store customers, because they see opportunities for sales that other stores may lose.
 
"You've got the Best Buys of the world saying, 'We need to figure out how to compete in this market. We've got traffic coming into our stores; how can we engage them?' That is a completely different mindset than has existed in most retailers for years."

12/6/13 (c) 2013 Rochester Business Journal. To obtain permission to reprint this article, call 585-546-8303 or email service@rbj.net.



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